MPs look at overhauling financial regulation

A COMMITTEE of MPs is to look at whether insurance, banking, building society and personal finance regulation in the UK should be overhauled as a result of recent scandals, writes Peter Rodgers.

An inquiry by the Treasury and Civil Service Select Committee, to start next month, will ask whether self-regulation is still appropriate and whether controls over banks and building societies should be integrated with the rest of the financial industry.

This is likely to involve an examination of whether the Bank of England should be broken up by taking away its banking supervision department and creating a separate agency. In a report last month recommending independence for the Bank, the committee came down against a break-up - unless there were financial regulation reasons for doing it.

Building societies are now regulated by a separate commission reporting to the Treasury.

The terms of reference for the committee's inquiry, released yesterday, also said MPs would examine the division of responsibility for the financial services industry between different government departments.

Among its list of questions is whether the enforcement of the Financial Services Act has been adequate. There is pressure in the City for a new enforcement agency to be set up.